Health eco midterms

What field studies how individuals, families, businesses, and societies use limited resources to fulfill unlimited wants?

Economics

What condition exists when wants exceed what can be made from all available resources at a given time?

Scarcity

Which resource problem, unlike scarcity, is temporary?

Shortages

Why would scarcity persist even if everyone were rich?

Resources and time remain limited, and people compete for resources

What term refers to things required for basic survival, such as food, clothing, and shelter?

Needs

What term refers to anything not needed for basic survival?

Wants

How do needs and wants differ in their limits?

Needs are limited; wants are unlimited

What term refers to worth that may be monetary or intrinsic?

Value

What term refers to the capacity or ability to provide satisfaction?

Utility

What concept contrasts the low value of necessities such as food and water with the higher value of nonnecessities such as diamonds and luxury goods?

Paradox of Value

Which principle holds that everything has a cost, even when it is free?

TINSAAFL: “THERE IS NO SUCH THING AS A FREE LUNCH”

What can competing stakeholder interests produce when groups each seek funding for their own sanitation solutions?

Fragmented solutions instead of a coordinated plan

Which sanitation approach addresses the behavior that can cause new pipes, water treatment, and toilets to be wasted?

Health education

What term refers to how much an individual, business, country, or the world makes?

Production

What are tangible objects that satisfy wants or needs called, and what are actions that satisfy wants or needs called?

Goods; Services

What classification includes goods used to provide services or make money, such as machines, buildings, and tools used to assemble an automobile?

Capital Goods

What are the four factors of production?

Land, labor, capital, and entrepreneurship

Which additional factor of production have some economists begun to list?

Technology

Which factor of production includes surface land, water, fish, animals, forests, and mineral deposits?

Land

Which factor of production is human effort directed toward producing goods and services?

Labor

Which factor of production consists of previously manufactured goods used to make other goods and services?

Capital

What term refers to the amount of output resulting from a given level of inputs?

Productivity

Which factor of production involves taking risks to develop new products and start new businesses for profit?

Entrepreneurship

What financial risk accompanies entrepreneurship, and about what percentage of new business enterprises fail?

Entrepreneurs incur the costs of a failed business; about 30% of new business enterprises fail

What term refers to sacrificing one good or service to obtain another?

Trade-off

What term refers to the value, in time, energy, or money, of the next best alternative given up?

Opportunity Cost

Which model shows all possible combinations of two goods or services an economy can produce with scarce resources, illustrating trade-offs and opportunity costs?

Production Possibilities Curve (PPC)

What four assumptions underlie the Production Possibilities Curve?

Two goods only, full resources used, fixed resources, and fixed technology

Along the PPC for crab puffs and storage sheds, what happens to crab-puff production as storage-shed production increases?

Production decreases

In what sequence do inputs become products available to final users?

Factors of productions (LLCE), Production/Manufacturing, goods and services, consumers

What arrangement assigns a small number of tasks to each worker, with different people doing different jobs for greater efficiency?

Division of Labor

What term refers to focusing on one activity or task so goods are produced efficiently?

Specialization

What term refers to increased productivity to produce maximum output?

Efficiency

What problem is illustrated by “Too many cooks spoil the broth”?

Too many people working on the same task without coordination can ruin the result

What term refers to how much consumers buy?

Consumption

How does increasing or decreasing land, labor, and capital affect production?

Increasing them increases production; decreasing them decreases production

What do many entrepreneurs invest back into production?

Profit

Which economic model illustrates the flow of goods and services through the economy?

The Circular Flow Model

In the circular flow model, what names are used for producers and consumers, respectively?

Firms; households

In the circular flow model, how do factors of production and finished goods move between households and firms?

H supply factors of production to firms; firms supply finished goods and services for H consumption

Which market is where goods and services produced by businesses are sold to households?

The Product Market

Which market is where land, labor, capital, and entrepreneurship are sold to businesses?

Resource(factor) Market

Which payments flow from businesses and individuals to the government in the circular flow model?

Taxes

Which two groups receive public goods from government in the circular flow model?

Businesses and individuals

Which part of the economy is run by individuals and businesses?

Private Sector

Which part of the economy is controlled by government?

Public Sector

What term collectively identifies rent, wages, interest, and profit paid for factors of production?

Factor Payments

Which payments redistribute income through government programs such as welfare and social security?

Transfer Payments

What term refers to government payments to businesses?

Subsidies

What term refers to a theory or simplified representation used to explain and predict economic behavior?

Economic Model

What assumptions and simplifications are used when analyzing an economy with a model?

Some factors remain constant, and only the basic factors needed to analyze the problem are shown

What term refers to the total money needed to produce an item and pay for all factors of production?

Cost

What term refers to the total amount a company or government takes in?

Revenues

Which costs do not change regardless of how much is produced, such as rent and capital expenses?

Fixed Costs

Which costs rise or fall depending on how much is produced, such as labor and raw materials?

Variable Costs

What equation combines fixed and variable costs?

Total Costs

What term refers to the additional cost of the next unit produced?

Marginal Costs

How is profit calculated from revenues and total cost?

Profit = Revenues - Total Cost

Which principle of capitalism is the drive to make money?

Profit Motive

Which two named analyses compare marginal or extra benefits with marginal or extra costs of an economic decision?

Cost Benefit Analysis; Marginal Analysis

Under cost benefit analysis, when does a business proceed with an economic decision?

When the benefit is greater than the cost

How can immediate spending on cheap items instead of long-term saving affect economic prosperity?

It can lead to lower economic prosperity by missing long-term benefits

What term refers to the amount of a good or service a consumer is willing and able to buy at various prices during a time period?

Demand

Which law states that consumers buy more when a good's price decreases and less when its price increases?

Law of Demand

Which tool lists prices and desired quantities to analyze consumers' purchases?

Demand Schedule

Which table lists the quantity one consumer would buy at various prices?

Individual Demand Schedule

Which table lists the quantity all consumers would buy at various prices?

Market Demand Schedule

What graph plots price against quantity demanded and has a downward slope?

Demand Curve

What term refers to the amount a consumer is willing and able to buy at each particular price during a given time period?

Quantity Demanded

What term describes a change in the amount purchased when a product's price changes, shown by movement along the demand curve?

Change in Quantity Demanded

Which three factors can lead to a change in quantity demanded?

The Substitution Effect; The Income Effect; The Law of Diminishing Marginal Utility

Which effect occurs when a product's price rises and consumers buy less of it and more of another product used in its place?

The Substitution Effect

Which effect links increased consumer purchasing power with increased demand, and decreased purchasing power with decreased demand?

The Income Effect

Which law states that utility decreases as more units of a good or service are consumed?

Law of Diminishing Marginal Utility

Which assumption means all other things are held constant?

Ceteris paribus

What change occurs when the entire demand curve shifts rather than moving along the same curve?

Change in demand

What are the five shifters of demand?

Tastes and Preferences; Number of Consumers; Price of Related Goods; Income; Future Expectations

What term describes goods used in place of one another, such as Pepsi and Coke?

Substitutes

How does demand for one substitute change when the price of the other rises versus falls?

It increases when the other price rises; it falls when the other price falls

What term describes goods bought and used together, such as skis and ski boots?

Complements

How does demand for one complementary good change when the price of the other rises versus falls?

It falls when the other price rises; it increases when the other price falls

Which goods, such as luxury cars, have demand that rises as income increases and falls as income decreases?

Normal Goods

Which goods, such as used cars, have demand that falls as income increases and rises as income decreases?

Inferior Goods

How does demand change when a good becomes fashionable versus goes out of style?

It can increase when fashionable and decreases when it goes out of style

How does an increase in population affect demand?

Demand increases

How do expectations of a future price increase versus a future price decrease affect present demand?

An expected increase raises demand now; an expected decrease lowers demand now

At unchanged prices, which demand-curve movements represent more cereal wanted versus less cereal wanted?

Rightward shift: increase in demand; leftward shift: decrease in demand

What measures how consumers react to a change in price?

Elasticity of Demand

Which demand type is very sensitive to price changes and often applies to nonnecessities with many substitutes and a large share of consumer income?

Elastic Demand

Which demand type is not very sensitive to price changes and often applies to necessities with few substitutes and a small share of consumer income?

Inelastic Demand

Which demand type involves a proportional change in demand when price changes?

Unit Elastic Demand

How do the demand curves of elastic and inelastic demand differ in orientation?

Elastic demand is more horizontal; inelastic demand is more vertical

How can one product's demand elasticity differ across price levels?

It can be elastic at one price level and inelastic at another, depending on the price range

When a price fall from $3 to $2 changes expenditure from $6 to $8, $6 to $5, and $6 to $6, which demand types do these responses illustrate, respectively?

Elastic Demand; Inelastic Demand; Unit Elastic Demand

What four factors affect demand elasticity?

Availability of Substitutes; Relative Importance; Necessities vs. Luxuries; Change over time

How does demand for gasoline from a particular station compare with demand for gasoline in general?

Gasoline from a particular station is elastic; gasoline in general is inelastic

Which demand classification applies to table salt, services of medical doctors, and insulin?

Inelastic Demand

Which demand classification applies to fresh tomatoes, corn, or green beans, and to butter?

Elastic Demand

What term refers to the amount of goods producers are willing to offer at various prices?

Supply

Which law describes suppliers' tendency to offer more goods at a higher price?

Law of Supply